Exhibit 15-5 Consider the natural monopoly depicted in exhibit 15-5.What price should regulators set in order for the natural monopolist to at least break-even?

Question

Exhibit 15-5  Consider the natural monopoly depicted in exhibit 15-5.What price should regulators set in order for the natural monopolist to at least break-even?

Quizplus · Accepted Answer

The break-even point for a natural monopolist occurs where the marginal cost curve intersects with the average total cost curve. In this case, that point occurs where ATC = $10. Therefore, regulators should set the price at $10 to ensure that the firm at least breaks even.

Exhibit 15-5 Consider the Natural Monopoly Depicted in Exhibit